Wednesday, June 16, 2010

Why Chinese Stocks Struggle 2

My timely article was punctuated today as UTA got crushed by 10% as they inanely diluted current shareholders by 20% to raise $20m at a share price 15% below the 50 day moving average (Universal Travel to raise $20M with stock sale). I swear if I have one more Chinese company do these shenanigans, I am going to vomit. I do wonder whether a fair amount of self-dealing is going on. It doesn't matter if you are growing income by 20% a year if share count is increasing at the same pace.

Then to add fuel to the fire, GXDX was absolutely torched (down 25%) as they lowered 2010 guidance from $1.8 to $1.20 (Genoptix Shares Slammed After Guidance Cut). How can you miss by that much???

If you can not tell, I am getting pretty frustrated by Magic Formula stocks.

2 comments:

兆以 said...

人生是故事的創造與遺忘。..................................................................

MagicDiligence said...

Secondaries below 52-week lows are hard to understand. Hopefully they have a bunch of new acquisitions lined up immediately to explain this. Of course, that cash horde and the fact that they always sling equity in these deals makes that explanation less reasonable too.

MFI has been rough this year. Real rough.